Unlike borrowing money to meet cash flow needs, factoring does not create debt. “Getting a loan” increases your ultimate expenses by the amount of interest, and reduces the bottom-line value of your company.
Loans also require collateral limited by your hard assets along with calendar-based reporting and minimal increases. Factoring is NOT a loan, so there is no debt to repay. Because the banking industry is in a constant state of doubt, with banks going out of business or the government taking them over, requirements for borrowing can change overnight. With factoring, that risk is eliminated. Factoring is based on your customers ability to pay.Your balance sheet is more attractive and your financial position is strengthened.